Head of Zune to Depart

(Redmond, Wash.) A Microsoft Corp. executive responsible for its newly
launched Zune digital music player will leave the company.

The software maker said the departure of Bryan Lee, a corporate vice president
in Microsoft's Entertainment and Devices division, was for personal reasons
and "absolutely not" related to sales of the music player, which came
out in mid-November to soft reviews.

Zune still lags far behind Apple Inc.'s iPod in the United States. Microsoft's
device captured about 10 percent of the U.S. market for hard-drive-based MP3
players in December, while 85 percent of the market went to iPod, according
to research firm NPD Group.

Microsoft has said it expects to sell 1 million units in fiscal year that ends
June 30.

Lee, 43, led business development and marketing efforts for the Zune, while
J Allard, another corporate vice president, oversaw design and development.
Allard will assume Lee's Zune-related duties, after a transition period of several
weeks, Microsoft said.

Lee was hired in 2000 to work on business development for the Xbox video game
console and served as the first chief financial officer for the Entertainment
and Devices division.

Lee "felt there was never a great time" to leave Microsoft, but that
"after reaching this milestone, he's going to leave the company and pursue
other things at this time," said Molly O'Donnell, a spokeswoman for the
division.

Lee also oversaw Microsoft's eHome group, which handles Windows Media Center
Edition and the company's television efforts. Those teams will now report to
Robbie Bach, Entertainment and Devices Division president.

Van Baker, an industry analyst with Gartner Inc., saw Microsoft's announcement
Wednesday as "clearly a sign of trouble in Zune-land. It had an acceptable
launch week, but then it immediately slowed down."

But NPD Group analyst Stephen Baker said Thursday he didn't believe Microsoft
watchers should read too much into the move, because Bach and Allard remain
in place.

Lee had a role in Microsoft's unusual agreement to share a reported $1 of the
$250 purchase price of each Zune device with Vivendi SA's Universal Music Group,
a move intended to help Microsoft to build relations with major recording labels.

Even so, content owners have been loath to cooperate with Microsoft by easing
the digital restrictions on music tracks, said Rob Helm, research director at
Directions on Microsoft in Kirkland.

"It's a hard job," Helm said. "It's not something any other
company has managed to do, either."

Microsoft has acknowledged that some songs are unavailable for sharing through
wireless song-swapping, a key feature by which the company has tried to distinguish
the Zune from the iPod. Microsoft has said that's because the technology is
in an early stage rather than because recording labels have blocked certain
tracks from sharing.